Dear me, have you noticed how many middle-aged, bearded blokes are around these days? It makes Iain Banks terribly difficult to spot in a crowd. Maybe that 70s polytechnic lecturer look he has assiduously adopted for so many years is finally in fashion. Still, when he strides into Edinburgh's swanky Balmoral Hotel, fresh off the train from his home in North Queensferry, he looks trim and well-groomed – and, slightly surprisingly, orders a mineral water from the bar.

Banks has cut down on drink, he says, and drugs have been banished. At 55, with his divorce a fading memory and now ensconced in a relationship with the film festival curator and novelist Adèle Hartley, his life would appear fairly contented – except for the fact that he's having to take a pay cut. As one of Britain's most consistently successful writers for a quarter of a century, surely this must have come as quite a shock?

Banks shrugs. "I'm getting less money for my next book contract," he says simply. "But I've heard of writers having their advances cut by 80%, and others getting nothing. You know, 'Sorry; we just don't want you any more.'"

In response, he plans to crank out a book a year, rather than his recent rate of one every 18 months. Ironically his new book, Transition, is being talked of as a return to form after what many fans consider a decade of lacklustre mainstream output. His last three non-science-fiction novels, The Business, Dead Air and The Steep Approach to Garbadale, left many wondering if the man who, in the 80s, was hailed as the "great white hope" of British literature was running out of steam. Readers bemoaned the relentless self-indulgence, with characters ranting endlessly about the world's ills in what felt suspiciously like the author's own voice. Fair point? "Dead Air is full of rants; it's a rant-based book," he concedes. "Yes, it's self-indulgence. I plead guilty; mea culpa."

Readers of both Banks's mainstream work and his hardcore science fiction (published under the name Iain M Banks) agree that the quality of his science fiction has held up much better over the years; the "M" novels Look to Windward (2000) and Matter (2008) were among his most ambitious and accomplished works in the genre. And, although Banks's publisher wouldn't supply me with sales figures, it's perhaps telling that Transition is being marketed in the US as an Iain M Banks novel. "I sell better as a science-fiction writer over there," he admits.

Attack on US foreign policy

So what does he think has prompted this seeming creative renaissance in his mainstream work? "With Transition, I wanted to prove something. I wanted to show I could do something like The Bridge [his third novel: a brilliant Kafkaesque account of the hallucinations of a man in a coma] again because until now, that has been my favourite. At my age, you realise that technically you are quite old, and you feel you have something to prove; that you can do something that has got energy in it."

The novel does feel akin to his much earlier works: structurally knotty, with multiple (often unreliable) narrators and plotlines. At the book's heart, though, is an exploration of the contradictions involved with a powerful organisation unilaterally adopting the moral high ground and setting out to put the world to rights. It's difficult, given the writer's previous rants on the evils of American imperialism both in and outside his fiction, not to see this as anything other than a veiled attack on US foreign policy.

Banks rejects the notion: "I don't think it's about America per se; it's more about power and the way that it is wielded in general. The Concern [a band of self-appointed metaphysical police officers with the ability to jump between parallel universes] is probably more like the Catholic church; a very, very long-lasting and very rich organisation with tentacles everywhere."

The novel features an alternate version of earth, in which a world ­ dominated by Asian influences is under attack from Christian terrorists. "It's meant to be a similar society to ours," he says, "but with some of the stuff inverted. Christianity would be a great religion for a terrorist; Catholicism especially because nobody's innocent, everybody's guilty. Babies are born guilty. Absolutely sick idea."

Banks's work has always been infused with nastiness; from Frank's macabre rituals in The Wasp Factory to the relentless violence and cruelty of 1997's deeply unsettling A Song of Stone. Transition is no exception, with the author applying his visceral imagination to the subject of torture. One member of the Concern, a psychopath known as The Philosopher, meditates at length – and in excruciating detail – on the uses of pain as an interrogation tool. That, concedes Banks, is an attack on US foreign policy.

"Yes, that all came from Abu Ghraib. Torture is such a slippery slope; as soon as you allow a society or any legal system to do that, almost instantly you get a situation where people are being tortured for very trivial reasons. You know: 'Well, there wasn't actually a bomb, but they might have been thinking about making one. . .'"

Misguided zealot or plain evil

As well as the political rants in his novels, Banks has never hesitated to make his own views clear in other ways. In 2004, he tore up his passport and posted the bits to then prime minister Tony Blair, in protest over the Iraq war, only applying for a new one when Gordon Brown (who has a house down the road from him in North Queensferry) assumed the hot seat.

"My girlfriend says we've got to stop describing ourselves as being only a mortar lob from his house . . . I'm only a little disappointed in Brown. I don't regard him as basically a war criminal, which is what Blair is. I think Blair was a misguided zealot, or just plain evil in the way Thatcher was – not in the way Hitler was, but still as evil as you get within the British system. But Blair and Brown have both been very good at standing up to the weak and poor, and utterly pathetic at standing up against the rich and powerful; they roll over every single time."

In January, Banks penned a rather gnomic two-sentence missive to the Guardian letters page: "We let the fat boys take over the tuck shop. We shouldn't be too surprised when we turn up only to discover that the shelves are bare," it simply said. What was that all about? "I'd had that phrase in my head for ages and I guess it was always destined to turn up in a book. I just thought I'd get it out there."

With book publishers now facing the same potentially ruinous challenges of the digital era as newspapers, Banks has gamely agreed to act as guinea pig for his own publisher, Little Brown, which is releasing an abridged audio version of Transition free on iTunes (the first instalment went online last week, on the same day the print version was published). Is he really reduced to giving away his work? Banks seems sanguine – perhaps even a little resigned – about the whole thing: "I think [the podcast] is quite brave of my publishers. I hope they're getting it right. My agent said to me: 'What do you think about this?' I said: 'I don't know.' We've got our fingers crossed."

What would he do if his work did stop selling? Could he contemplate retirement? "Even if I had enough money to live off the interest – and I certainly don't – I don't think I would. The way I imagine it happening is that the intervals between novels will just get longer again. I enjoy it too much – even if I knew I'd never get a book published, I would still write. I enjoy the experience of getting thoughts and ideas and plots and characters organised into this narrative framework. And apart from anything else, I've just gone through an expensive divorce so I couldn't retire."

It seems pretty depressing, though, for any aspiring writers if somebody of Banks's track record is having it rough. What next for him and his kind? "There will still be writers around, although I don't know how we'll get paid. Well over a century after the invention of motion pictures, we still have stage plays. The novel's not going to go away and I don't think the book will either."